Hawaii has given its public insurance funds emergency powers to cover condominiums when no private insurer will.
On July 1, 2025, the state enacted Senate Bill 1044, authorizing the Hawaii Property Insurance Association (HPIA) and the Hawaii Hurricane Relief Fund (HHRF) to provide coverage for high-rise condominiums and other classes of property that are unable to secure insurance in the private market. The new law was designed as a stopgap - limited to five years - and comes amid what lawmakers describe as a property insurance market failure for many condominium buildings across the islands.
The legislation responds to a severe contraction in the availability of condominium building master property insurance, especially for high-rise and aging buildings. According to the bill’s findings, premiums have skyrocketed - from $235,000 to over $1.2 million in one Waikiki case - while deductibles have increased tenfold. Many insurers have pulled out or limited their hurricane exposure to as little as $10–25 million per building.
This has left hundreds of associations underinsured or unable to renew coverage - making individual mortgages within those buildings ineligible for sale to Fannie Mae or Freddie Mac, which require full replacement coverage.
To address this, SB1044 empowers HPIA to write property insurance for eligible condominium buildings statewide - excluding hurricane coverage - and allows it to expand coverage to townhomes, single-family homes, and other property categories if the Commissioner of Insurance and the HPIA determine that a market failure exists.
Meanwhile, the HHRF may now offer hurricane insurance policies to high-rise condominiums, which it previously did not. The law explicitly limits coverage to buildings that are in "insurable condition" and requires a physical inspection prior to issuing or renewing a policy. Each condo association must submit bylaws and governing documents outlining how claims are handled between the master policy and unit owners.
To prevent long-term dependence on state-backed insurers, the legislation imposes a maximum 60-month coverage period through HPIA for high-rise condos. Rates must be actuarially sound, and HPIA is required to include provisions for premium increases and underwriting surcharges in its updated plan of operation.
The law also revives and expands the role of the HHRF. In addition to reinstating its authority to issue hurricane insurance where the market fails, SB1044 allows HHRF to impose a temporary flat recording fee - up to $44 per property document - to fund the hurricane reserve trust. This replaces the older, more regressive mortgage-based recording fee, which charged a percentage of the mortgage amount and disproportionately affected lower-income borrowers.
The HHRF may also assess licensed property and casualty insurers, subject to limits and oversight, and authorize a premium surcharge of up to 2% to help those insurers recover the cost of assessments. These surcharges must be disclosed on policyholders’ bills but are not treated as “premiums” for tax or commission purposes.
SB1044 doesn’t stop at insurance availability. Recognizing that many buildings are considered uninsurable due to deferred maintenance, the legislature also created a new Condominium Loan Program, administered by the Hawaii Green Infrastructure Authority. It provides low-cost loans for critical repairs like pipe replacement, fire sprinklers, and roofing.
The program is backed by a new Condominium Loan Revolving Fund, seeded with $20 million in general obligation bonds and $5 million transferred from the HHRF. In parallel, a Loan Loss Reserves Program was established to incentivize lending by community development financial institutions, offering loss coverage through reserve accounts held at participating lenders.
Eligibility for loans requires that a condo association show at least one letter of rejection from a financial institution and that the building either carries or will obtain full replacement insurance as a condition of the loan.
Finally, to prepare for long-term reform, SB1044 directs the Insurance Commissioner to conduct a comprehensive study on how to stabilize Hawaii’s property insurance market. The report, due in phases in 2026 and 2027, must consider funding strategies for HPIA and HHRF, explore mutual or captive insurance models, and recommend ways to ensure condo buildings remain in insurable condition.
While the bill is a temporary measure, it offers insurers, agents, lenders, and real estate stakeholders a critical window to adjust to fast-changing climate and underwriting realities. And with reinsurance costs rising and catastrophic losses mounting globally, Hawaii’s approach may become a model - or cautionary tale - for other states facing similar crises.
